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Chinese manufacturers target new markets

Published March 15, 2012

SHANGHAI, China (BRAIN)—Chinese bike manufacturers are beginning to look at expanding into new markets in Southeast Asia in the face of rising labor costs and restrictive export duties to Europe, said Xiao Yun Huo, vice secretary general of the China Bicycle Association.

The CBA is researching regulations, tariffs, government policies and market information in countries like Malaysia, Indonesia and Vietnam to determine whether it makes sense to shift some production there to remain competitive in today’s fast-changing world, Huo said through a translator during an interview on Thursday in Shanghai.

China is the industry’s leading bike exporter with 55.72 million units shipped outside the country last year at a value of $2.9 billion, according to the CBA. Exports fell 4.2 percent last year. China produced 83.45 million bikes last year, an increase of 2.3 percent.

Manufacturing has already begun shifting inland from China’s coastal cities as labor costs have risen, and now producers are beginning to look overseas to keep prices competitive on low-end mass production.

Although China far dominates other export countries, factories in lower cost locales like India are starting to pick up more business. India’s Hero Cycles recently announced a deal with Wal-mart to produce bikes for the retail giant, and opened a U.S. office to support its expansion. China producers have also been hurt by steep anti-dumping duties to Europe, Huo said. The 48.5 percent duties were extended until 2016 last year, although the EU Commission is reviewing that ruling.

The CBA is also looking to emerging markets in India, Indonesia and Dubai to market China-made bicycles. CBA, which hosts the China Cycle show in Shanghai, organized a new show in Vietnam called Intercycle last year, and is looking at a possible new exhibition in Indonesia, Huo said.